Test your basic knowledge |

AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Exists if a producer can produce more of a good than all other producers






2. The difference between total revenue and total explicit and implicit costs






3. Costs that change with the level of output. If output is zero - so are TVCs.






4. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






5. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






6. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






7. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






8. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






9. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






10. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






11. The sum of consumer surplus and producer surplus






12. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






13. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






14. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






15. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






16. The practice of selling essentially the same good to different groups of consumers at different prices






17. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






18. Two goods are consumer substitutes if they provide essentially the same utility to consumers






19. Ei > 1






20. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






21. Entry (or exit) of firms does not shift the cost curves of firms in the industry






22. Exists if a producer can produce a good at lower opportunity cost than all other producers






23. A good for which higher income increases demand






24. Models where firms agree to mutually improve their situation






25. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






26. The imbalance between limited productive resources and unlimited human wants






27. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






28. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






29. When firms focus their resources on production of goods for which they have comparative advantage






30. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






31. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






32. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






33. Exists at the point where the quantity supplied equals the quantity demanded






34. Ed = 0 - no response to price change






35. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






36. Ed = 8 - infinite change in demand to price change






37. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






38. The additional benefit received from the consumption of the next unit of a good or service






39. The change in quantity demanded resulting from a change in the price of one good relative to other goods






40. AFC = TFC/Q






41. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






42. A firm that has market power in the factor market (a wage-setter)






43. Entry of new firms shifts the cost curves for all firms downward






44. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






45. The output where ATC is minimized and economic profit is zero






46. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






47. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






48. The lost net benefit to society caused by a movement away from the competitive market equilibrium






49. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






50. Occurs when LRAC is constant over a variety of plant sizes